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Whole market is under the strong grip of fear, especially retail investors. More so those who joined the market during the past 2-3 years are finding it very difficult to stay invested. In fact, many investors have already exited. When stock prices go up, investors share their success stories with friends and contacts, but the same does not hold true when stocks fall. Investors are shy to share their failures.
Consider a ship sailing smoothly in the sea and you are boarded. Also, assume that to date no ship has ever sunk into the sea on this route. One day you see a small hole in the base and water starts logging inside it. What would be your reaction? Maybe since the hole is tiny, you may forgo. After a few days, you find the size of the hole has enlarged and good amount of water has started logging inside. Now you may become scary. You will try to find ways to plug it. Even after plugging it, still a small amount of water continues to flow inside and you leave it as it cannot be a devastating one. After some time you observe one more such hole developing at some other location. Before it gets bigger as the first one did, you will try to plug it immediately, isn’t it? This process will continue as long as it is manageable. In this process did you try to stop the waves in the sea? Or did you try to jump out of the ship? No, never because you knew any ship has ever drowned on this route.
Similarly exiting the market out of fear is not a solution, if you are a long term investor because Mr. Market has never sunk in the history of any economy. As a smart investor, you will have to find ways to protect your portfolio. You cannot escape the fear of Mr. Market but find ways to dance with it. Success is on the other side of Fear.
We cannot control Mr. Market who is not a single entity but whose actions are sum total of market participants. We can control only our actions. It is your actions that will decide the long term fate of your portfolio returns.
Emotions like fear pay a very important role in deciding the returns earned. Unfortunately, investors hardly pay attention to this vital parameter. In the next part, we shall discuss the ways to dance with fear.
Coincidently me (experience 31 years) along with Mr. Dilip Shah (experience 45 years), Editor Smart Investments are hosting a Seminar in Rajkot on Saturday, 31 Aug on the same topic and shall guide you on practical ways not only to protect your portfolio but also to gain handsomely when the market bounces back. Entry with prior registration only. Kindly use the link for seminar registration https://www.smartverc.com/seminar
"Nothing in life is to be feared, it is only to be understood. Now is the time to understand more, so that we may fear less." - Maria Sklodowska-Curie
By A K Asnani
Author - Way To Billionaire
(A K Asnani including associates holds less than 1% equity stake in all the stocks advised above. This stock is being regularly advised in various advisory services provided by him. He will not be responsible/liable for any loss arising out of investments based on its advices including any inadvertent errors/omissions. He is registered with SEBI as Research Analyst (INH000000420). This advice should not be construed as an offer to buy or sell securities. Stock price movements are subject to market risk. - Past performance may or may not be sustained in future.)
(This article was also published in Smart Investment.)